You want free community college — do it with a Pell Grant expansion

We learned this week that President Biden’s proposed infrastructure bill has a generous carveout for community college; if passed, it would deliver $12 billion to the sector in the form of grants and tax credits. That sum isn’t nearly enough to cover the cost of Biden’s campaign promise to make community college free, but it’s a step in that direction. 

I’ve previously argued that making college free is a bad idea. I won’t expand on that here. Instead, I’ll argue that if we are hell bent on making college free, there is a right way and a wrong way to do it. The federal government could directly fund community colleges, in cooperation with states, so they wouldn’t need to (or be allowed to) collect tuition and fees. However, a better option would be to increase the Pell Grant so that community college is effectively free for all, while maintaining the advantageous “voucher” style structure of the current system. 

The primary advantage of increasing the generosity of Pell Grant rather than instituting a federally funded system of community colleges is that it would give students access to more educational options, including private institutions, which often have a better track record of getting their students to graduation. While community colleges often play an important role in the local communities they serve, they are not always the most reliable option for aspiring students looking for a pathway to a career. The community college sector has consistently low graduation rates and capacity constraints have sometimes resulted in long wait lists for enrollment. 

Research has also shown that students who aspire to ultimately complete a bachelor’s degree are less likely to succeed if they start their education at a community college. By expanding Pell Grants, rather than making community college free, more students with this aspiration would have the ability to use the subsidy earmarked for them at a four year college that’s better able to support their goals.

Another problem with focusing on the expansion of federal funding to community colleges is that it would put tremendous strain on the industry of private sector educational providers that offer similar services, often with better outcomes. The latest available data indicates that students at private colleges, including both for-profit and nonprofit, earn credentials twice as often as students entering public two-year institutions. These institutions would likely struggle to keep their doors open when their student base has an option for free education.

If Biden’s broader aim is to make the first two years of education after high school free, then he should target the expansion of the Pell Grant benefit to the first four semesters of eligibility. In this sort of regime, grant support would be concentrated in the initial years of enrollment and decline for later years. This would have the benefit of indirectly addressing the challenge of student’s having debt and no degree, since those who begin college but don’t finish will have been able to try it without having to leverage their financial future to do so.

Surely Biden believes that the quality issues at community colleges can be solved if only they were to be sufficiently funded. He’s not necessarily wrong, but he’s not necessarily right either. Making community college free, through direct federal support to this sector, is akin to putting all of our eggs in a single basket. 

Using an expansion of Pell Grants, rather than expanding federal support solely for community colleges, means the next generation of college students won’t need to be guinea pigs in an experiment of socialized higher education. At the same time, the goal of making two years of college affordable, or free of cost, to all can still be met. 

Beth Akers, Ph.D., is a resident fellow at the American Enterprise Institute and former staff economist with the Council of Economic Advisers during the George W. Bush administration. Follow her on Twitter @DrBethAkers.